Insurance Law Monthly

In ABN Amro Bank NV v Royal & Sun Alliance Insurance plc [2021] EWCA Civ 1789 the Court of Appeal has reversed in part the lengthy judgment of Jacobs J at first instance, [2021] Lloyd’s Rep IR 467. There was no appeal against much of the judgment, but two issues were appealed. In the event, the dispute over one of the issues was settled, but the Court of Appeal nevertheless expressed its views on what the outcome would have been but for the settlement.

Arch Insurance (UK) Ltd v McCullough [2021] EWHC 2798 (Comm), a short judgment of Cockerill J, demonstrates that failure by the assured to comply with a condition precedent for notification of circumstances that may give rise to a claim against the assured is fatal to any claim against the insurers.

In England, the principle of utmost good faith is not an implied contractual term but rather informs the actual agreement between the parties and their conduct in carrying it out. In Diamond World Jewellers Pty Ltd v Catlin Australia Pty Ltd [2021] NSWSC 1431 the New South Wales Supreme Court has shown how utmost good faith can affect both parties in the claims process. Ultimately the fact that utmost good faith took effect as an implied term rather than a principle of construction did not affect the outcome of the case, and it is almost certain that the same result would have been reached in England.

The law has, in the context of aggregation clauses, drawn a clear distinction between “events” (the what) and “original causes” (the why). To date most of the cases have concerned events and relatively few have involved the definition of originating cause. The Court of Appeal in Spire Healthcare Ltd v Royal & Sun Alliance Insurance plc [2022] EWCA Civ 17, reversing the judgment of HHJ Pelling QC, [2021] Lloyd’s Rep IR 182, has confirmed the broad nature of the term and contains an excellent analysis of the latter.